Protein folding studies have progressed to the point, that the goal of atomic level understanding of folding pathways and nucleation processes in specific proteins, have become realistic. On the other hand, we are witnessing a major revolution in biology due to rapid advances in sequencing, structural genomics and proteomics studies. This calls for a new level of theory, where understanding of fundamental physical chemistry of protein folding is merged with deepest insights into the evolutionary origin of proteins as basic elements of living cells. This development will bring us one big step further to the coveted goal of understanding the physical origins of life. It will have clear impact on how we design new medicines as molecular structure and physical principles of folding, stability and phylogeny of drug targets are elucidated. This synthetic proposal aims to build the new generation of protein folding theory bottom, up from detailed atomistic study of protein energetics, to global issues of how modern protein families evolved in divergent evolution process. As a first goal, atom-based reliable potentials for protein folding and design, based on physical principles of protein stability, will be developed. All-atom folding simulation and detailed experimental studies will then be carried out for several proteins such as ribosomal protein S6 and protein G, in order to achieve a complete description of folding pathways of these proteins. In close collaboration with single- molecule experiments, a comprehensive evolutionary theory and bioinformatics analysis of mechanical properties of proteins will be developed. It will uncover features of amino acid sequences that make proteins mechanically robust and will enable the design proteins with selected mechanical properties. Further, a comprehensive theory of morphogenesis of protein folds in the process of divergent evolution ("Big Bang" scenario) will be developed. This will provide a deep understanding of how superfamilies and families of modern proteins have evolved and what are the evolutionary relationships between them. The theory development will culminate in an analytical replica and mode-coupling theory of protein folding dynamics that will include side-chain packing along with backbone folding. This theory will outline optimal conditions for the design of stable proteins.